Bond star Gross starts new Janus gig with modest needs

Tim McLaughlin

3 Min Read

Bill Gross, co-founder and co-chief investment officer of Pacific Investment Management Company (PIMCO), wears sunglasses as he arrives to speak at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014. REUTERS/Jim Young

(Reuters) - Bond star Bill Gross will commence his new gig at Janus Capital Group Inc JNS.N with modest needs - a trader and someone to deal with clients - as he takes over a tiny fund with the hopes of making a big splash.

One unanswered question is whether Gross will have the resources to match the success he had at Pacific Investment Management Co, which he left last week in a surprise move that rattled global bond markets.

“It’s unlikely that Janus will ever match that level of support, raising the question of how successful Gross can be with fewer resources,” Morningstar Inc analyst Sumit Desai said in a research report on Thursday.

Pimco has about $2 trillion in assets under management, compared to about $178 billion at Janus. Gross will be managing the $13 million Janus Unconstrained Bond Fund (JUCAX.O).

On Friday, Janus confirmed Desai’s Morningstar report that Gross, who made his reputation running the massive $222 billion Pimco Total Return Fund (PMBIX.O), will have modest needs at the early stage of his tenure.

“To start, Bill has requested a trader and a client-facing professional, but we are in the very early days of these efforts and we will continue to learn, with Bill, how he might best be served,” Janus spokesman Steven Shapiro said.

Shapiro said he didn’t know if anyone had been hired yet.

At Pimco, Gross had access to more and better information than any other investor, thanks to an army of traders, researchers, portfolio managers and other specialists, Desai said in his report.

And while Gross can now be more nimble in his bond picks with a smaller fund, Desai said that’s not been his focus in recent years.

“His stock in trade has recently been a focus more on macroeconomic calls than issue selection,” Desai said. “The smaller asset base thus doesn’t offer him the same kind of advantage that, say, a small-cap stock-picker or manager sorting through another liquidity-constrained universe might have.”

One head of mutual fund research at a large U.S. brokerage firm said he would not add the Janus Unconstrained Bond Fund to his firm’s recommended list until he sees that Gross has a solid team behind him.

“Right now, Bill is the lead manager, the lead research officer, the lead pencil sharpener, the lead coffee getter,” said the executive, who wished to remain anonymous because he is not permitted to speak to the press.

“At some point, he is going to need to get more people and we want to know who steps up.”